COTTONWOOD HEIGHTS — A controversial development at the mouth of Little Cottonwood Canyon will break away from Cottonwood Heights after the city decided to end a court fight to keep it.

"It just wasn't penciling out," Mayor Kelvyn Cullimore said Thursday, predicting a battle in 3rd District Court to keep the developer from disconnecting the Tavaci project from the city could cost more than $500,000.

Tavaci developer Terry Diehl wants higher density in the 87-acre development than the city would allow. The proposed higher density also drew the opposition of the CHVoters group, which has actively petitioned the city to hold its ground on lower density limits.

Third District Judge Paul G. Maughan had denied the city's motion to dismiss the lawsuit on March 1. He signed an order Wednesday declaring the development is "disconnected and separated from the municipal boundaries of Cottonwood Heights, and now becomes a part of the unincorporated area of Salt Lake County."

Cullimore said other disconnect proposals showed the courts favoring property owners over municipalities. Even if a successful commercial/residential development emerges in the Tavaci development, Cullimore said it would take many years for taxes from the development to overtake the litigation costs, so the city decided to let the area go.

"It's one of those steps you've got to make to make sure you're executing your stewardship correctly," Cullimore said. "We really had hoped to keep them in the city."

Lawyers Richard Burbidge and Bruce R. Baird represent the developer. "I would like to commend the city and its counsel for taking this action, which we believe will result in a positive development for the community," Burbidge said in a statement released Thursday morning.

"We look forward to working through the processes of Salt Lake County to obtain approval for a world-class, resort-style development on Tavaci, which will be a crown jewel of quality," Baird said.

Cullimore said he made courtesy calls to Salt Lake County Mayor Peter Corroon and several members of the County Council members, letting them know the controversial development was coming back into their jurisdiction for zoning and other development issues.

"We do not believe they will necessarily find Salt Lake County to be any more receptive than we were to the proposed zoning changes," Cullimore said.

Salt Lake County Planning Manager Max Johnson said the Tavaci development was in the county's jurisdiction before Cottonwood Heights incorporated in 2005. "It was totally a single-family development at the time. There was no commercial element," and the approved county zoning density was much lower than would have been allowed by Cottonwood Heights.